Japanese Yen holds as markets await Tokyo inflation data

• USD/JPY remains near 163.80 despite softer US consumer confidence figures.
• Trump says he wants to avoid targeting Iranian power plants and bridges but maintains pressure on Tehran to reach a deal.
• Tokyo core CPI is expected to rise to 1.7% YoY, while unemployment is forecast to remain at 2.5%.

USD/JPY trades slightly higher near the 163.80 area on Tuesday, remaining close to multi-decade highs as the Japanese Yen (JPY) struggles to attract demand. Softer United States (US) consumer confidence data limited the US Dollar’s advance, although the pair maintained its upward bias.

The Conference Board Consumer Confidence Index declined to 90.8 in July from an upwardly revised 92.2 in June. The Present Situation Index fell for a third consecutive month to 114.9, while the Expectations Index remained unchanged at 74.7, suggesting that US households remain cautious about business and labor market conditions.

Geopolitical uncertainty also remains in focus. US President Donald Trump said Washington has a “very strong position” with Iran and described Pickaxe Mountain as “not a big problem.” Trump added that he would prefer to avoid attacking power plants and bridges and said he was “not looking to do that,” although he maintained that the US could strike additional targets if Tehran fails to reach an agreement.

Investors now await Tokyo inflation and employment figures. Tokyo CPI excluding fresh food is expected to accelerate to 1.7% YoY in July from 1.6%, while headline inflation previously stood at 1.7%. CPI excluding food and energy was previously 1.9%, and Japan’s Unemployment Rate is forecast to remain unchanged at 2.5%.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 163.85. The pair retains a bullish near-term bias as it holds above both the 20-period Simple Moving Average (SMA) at 163.76 and the 100-period SMA at 162.65, keeping the broader uptrend structure intact despite recent consolidation. The Relative Strength Index (RSI) at 60.60 has eased from overbought territory but still points to constructive momentum, suggesting dips are likely to attract buyers while the price remains supported by these averages.

On the topside, immediate resistance is located at the recent horizontal cap near 163.96, where a clear break would open the way for a fresh leg higher. On the downside, initial support aligns around 163.76, where a horizontal level converges with the 20-period SMA, followed by additional cushions at 163.64 and 163.59; a deeper pullback toward the 100-period SMA at 162.65 would be needed to materially challenge the prevailing bullish structure.

(The technical analysis of this story was written with the help of an AI tool. Know more.)